The Cuban leader's offer came in a rare interview in Havana with actor-director Sean Penn, who wrote about it for the Dec. 15 edition of The Nation magazine. The article was released on the magazine's Web site Wednesday.

Penn asked if Castro would meet with Obama in Washington. The Cuban president said he "would have to think about it," but that it would not be fair for either leader to go to the other's territory. Instead he suggested the base at Guantanamo.

"We must meet and begin to solve our problems, and at the end of the meeting, we could give the president a gift ... we could send him home with the American flag that waves over Guantanamo Bay," Castro said.

Raul Castro is largely seen as more pragmatic and conciliatory than his fiery older brother Fidel, and has offered to meet with U.S. officials several times since replacing his ailing sibling in mid-2006.

Cuba's main focus in such a meeting would be on normalizing trade, Castro said.

"The only reason for the blockade is to hurt us," he told Penn, using the term the communist leadership employs for the five-decade-old U.S. trade embargo. "Nothing can deter the revolution. Let Cubans come to visit with their families. Let Americans come to Cuba."

Obama has said he is willing to meet with Raul Castro without preconditions, and that after taking office on Jan. 20 he would "immediately" lift all restrictions on family travel and remittances to Cuba. Under tough rules imposed under President George W. Bush, Cuban Americans can now visit their relatives on the island only once every three years.

But Obama has said he would not support lifting the embargo until Cuba releases all political prisoners. An independent human rights group on the island last counted 219 prisoners of conscience behind bars.

Castro told Penn that "no country is 100 percent free of human rights abuses, but insisted that "reports in the U.S. media are highly exaggerated and hypocritical."

Cuba often typically answers human rights charges by pointing out the accusations of torture and other abuse at the U.S. military's Guantanamo prison in easternmost Cuba.

Cuba leases the base property to the Americans in an uncomfortable arrangement that dates to the Spanish-American war, and insists that it eventually be returned to Cuban control. But as Cuba's Defense Minister for nearly five decades, Castro is said to have had good relations over the years with U.S. base commanders.

"The base is our hostage," Castro told Penn. "As a president, I say the U.S. should go. As a military man, I say let them stay."

Castro appeared to refer to Cuba's conciliatory statements when the prison first opened in January 2002. The communist government said then it would not oppose the housing of terror suspects on the base and offered to provide medical assistance to the prisoners, saying "we are willing to cooperate in any other useful, constructive and human way that may arise."

"Despite the fact that we hold different positions as to the most efficient way to eradicate terrorism, the difference between Cuba and the United States lies in the method and not in the need to put an end to the scourge," the government said then, four months after the September 11 attacks on America.

Military officers from both countries meet periodically to discuss mutual matters. Castro told Penn that 157 such meetings have been held since they began in 1994, on the third Friday of every month, and that they are recorded and alternate between the U.S. base and Cuban-held territory.

Castro said the meetings now include a U.S. State Department representative, but "the State Department tends to be less reasonable than the Pentagon." Still, he said, "no one raises their voice because ... I don't take part. Because I talk loud. It is the only place in the world where these two militaries meet in peace."

Castro, 76, rarely gives interviews and this was his first with an American since being named interim president when his older brother Fidel fell ill in late July 2006. Castro officially assumed the presidency in February when his brother, now 82, resigned for health reasons.

Castro told the Communist Party Granma in August 2006 that Cuba was opened to normalizing relations with the U.S., but warned that the U.S. government will get nowhere with threats or pressure.

"They should be very clear that it is not possible to achieve anything in Cuba with impositions and threats," said Castro, who was then acting president. "On the contrary, we have always been disposed to normalize relations on an equal plane.

"What we do not accept is the arrogant and interventionist policy frequently assumed by the current administration of that country," he added.

Penn wrote that he reminded Castro that even some conservative Republicans in the U.S. have called for ending the embargo in order to give Cubans more contact with the outside world and empower them to end the "dictatorship." Castro ignored the slight and responded boldly, Penn wrote, saying "We welcome the challenge."

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